Scotland will continue to suffer from the impact of the global economic downturn until 2017, despite having already shown the first tentative signs of stability and improving business confidence, according to research released today by the Ernst & Young Scottish ITEM Club.
In its summer update report, the Scottish ITEM Club has predicted that the Scottish economy will contract by 3.1% in 2009, followed by a year of stagnation in 2010, and rising GDP in 2011. However, only by 2017 will employment in Scotland reach the same levels achieved in 2008.
Dougie Adams, Economic Advisor to the Ernst & Young Scottish ITEM Club, comments: “Whilst there have been some early signs that the Scottish economy is beginning to stabilise, like the rest of the UK, the patient is still a long way from recovery and there is more pain to come in the form of significant job losses.
Tourism only a small offset for the retail and hotel sectorsRising unemployment and waning levels of confidence, will see consumer expenditure curbed by 3% this year, and by nearly a further 1% in 2010, according to the report. This is having a substantial knock-on effect on retailers, hoteliers and restaurateurs, and output in the sector is expected to shrink by 5.0% this year and 0.7% next year.
Adams comments: “While the weak pound may be increasing the number of European accents in Scotland’s tourist hot spots and attracting UK visitors who would otherwise have gone abroad, the impact is negated by the generalised weakness in consumers’ expenditure.
“We are expecting Scotland’s retail-related and hotel sector to have shed in the region of 30,000 jobs, between 2008 and 2011.”